Budget 2018: Decoding the event from a layman’s perspective

The Union Budget is an annual exercise which has since its inception been of interest to the common man. Be it curiosity for knowing the tax slab or expectation of a cut in rates of different items, every Budget presented till date has been able to give people something to cheer about.

This year, due to GST implementation, other than changes in the basic custom duties and excise duty on items like petroleum products, no other changes in the indirect taxes space will happen.

But how does a layman react to the announcements made by the Finance Minister in the Parliament on that day?

For all the latest stories and analyses in the build up to Budget 2018, click here.

Here are a few key things you should know leading up to the Union Budget:

The Budget document: The Budget speech and the document has two parts – Part A and B. Part A is the macroeconomic part of the budget where various schemes are announced and allocations are made to several sectors.

Part B deals with the Finance Bill, which contains taxation proposals such as income tax revisions and indirect taxes.

Income-Tax slabs: The tax an individual pays every year is calculated on the basis of his/her gross total income. The tax is calculated according to the income tax slabs announced by the government every year in the Budget. This is one of the major highlights of the Budget and one that everyone looks forward to.

Fiscal policy: Fiscal policy involves altering the levels of government spending and tax rates aimed at influencing the level of activity in an economy. These changes can significantly impact economic activity and as such need to be coordinated with a sound monetary policy to create healthy economic growth.

Capital Budget: It consists of capital receipts and payments, investments in shares, loans and advances granted by the central government to state governments and government entities.

Revenue Budget: Revenue receipts are divided into tax and non-tax revenue. Tax revenues constitute taxes like income tax, corporate tax, excise, customs, service and other duties that the government levies while non-tax revenue sources comprise interest on loans and dividend on investments.

Budget Estimates: This is the amount of money allocated in the Budget to any ministry or scheme for the coming financial year.

Revised Estimates: It is a mid-year review of possible expenditure, taking into account the rest of expenditure, New Services and New instrument of Services etc. Revised Estimates are not voted by the Parliament, and hence by itself do not provide any authority for expenditure. Any additional projections made in the Revised Estimates need to be authorised for expenditure through the Parliament's approval.